I think the Pokemon Trainer does the switching characters much better and with more interesting results than Zelda and Sheik.
Because one was always used to do the Smashes and one used to be defensive and do quick damage I thought it was fairly limited, and I kept on accidentally transforming. I do think you are right that the slower transformation hurts the character.
I hope they do split the character, as I thought Zelda would be more interesting paying tribute to all the different ways she has helped.
This new move of hers is cool. I would personally love to see her using the light arrows as well.
As for splitting the characters it is a good idea, because it can actually give us another female fighter. Sheik becomes Impa and can be re-balanced.
That would give us 5 female characters, and if they made a Pokemon Trainer male and female that would be sorta 6. If they would give us a female Fire Emblem character that would be 7. Then there is Birdo?

Maybe female.